TIGA has outlined how a successful video games industry will contribute to the Government’s modern industrial strategy and stated objective of securing the highest sustained growth in the G7, by providing high skill employment and productivity growth across the UK.
In response to the Government’s ongoing consultation, TIGA has strongly re-affirmed the case that the video games development sector is one of the subsectors within the creative industries that the Government should focus on. This is because:
- the market for video games is substantial and growing significantly. The global market for video games is estimated to be worth almost $190 billion,[1] supported by 3 billion players worldwide.[2] The consumer games market is forecast to reach $227 billion in 2025.[3]
- the UK is already one of the largest centres for games development in the world and employs the largest development workforce in Europe. TIGA’s latest research indicates that the sector grew to 25,419 full-time equivalent development roles in UK games companies by May 2024.
- the UK games development sector provides high skilled employment: over 80 per cent of the development workforce in many studios are qualified to degree level or above.
- the industry supports economic growth in clusters throughout the UK: approximately 80 per cent of the workforce is based outside of London.
- Games development is export-focused: 95 per cent of games development studios export at least some of their content.
The UK is a good place to set up a game studio, but growing is difficult.[4] 53 per cent (882) of all studios founded between 2008 and 2018 did not survive to 2023.[5] Accordingly, many studios stay small: 78 per cent of all UK games studios have four or fewer employees.
As such, TIGA’s proposals include:
- The Government could explore the case for enhancing VGEC. This would encourage more investment, including FDI, into the UK games development sector. VGEC effectively reduces the cost of games development and incentivises investment. The average annual growth from the date when companies could claim VGTR (VGEC’s predecessor) in 2014 until May 2024 has been 9.5 per cent.
- The Government could support and expand the UK Games Fund’s Prototype Fund and Content Fund,[6]which are run by the UK Games Talent and Finance (UKGTF) Community Interest Company. These Funds help start-up studios and small studios to access finance. This in turn enables more studios to develop new IP, attract investment and grow. Equally, the Tranzfuser annual programme run by UKGTF which supports recent graduates and young developers who are starting out
in the games industry, should be maintained. - The Government could also explore the idea of introducing larger grants than are currently available for games development, delivered on a £ for £ match funded basis, to crowd in more private investment into the sector.
- The Government could establish and fund a National Games Accelerator (NGA) to enable more start-ups to scale-up and attract investment. The NGA could provide a location-based acceleration programme. The NGA could offer a 6-month programme to support early-stage companies (2-4 years old) to prepare prototypes, develop commercial models and attract investment through training (entrepreneurial, commercial, marketing, analytics and project management skills, business plan development and pitching).
- Funding for BTECs should therefore be retained and suitable T-levels for the games industry should be developed. BTECs provide an important route into higher education, including for games courses. BTECs can also provide a route into higher education for students from less privileged and diverse backgrounds.
- The apprenticeship levy should be transformed into a general training levy, enabling employers to spend the money on any high-quality training programme.
- The Government could explore the case for establishing an Industrial Secondments Programme (ISP)to enhance skills development by enabling games lecturers to spend up to 12 months in a games development business.
- The Government could assess the scope for enabling more universities to support spin-out companies, including start-up studios.A key challenge is funding. Facilitating studio start-ups alongside an academic programme inevitably creates costs for universities. The Government could examine options for financing spin-out activities.
TIGA also emphasised the importance of non-sector specific subjects:
- Competition typically promotes choice, reduces prices and improves services. There is evidence to suggest that markets in the UK are moderately less competitive and slightly more concentrated since the financial crisis of 2008. The Government should benchmark the effectiveness of the UK competition regime in comparison to other OECD and G7 countries and consider reforms if appropriate.
- UK electricity costs are relatively high. Electricity prices in Germany are 34-39 per cent lower than for comparative businesses in the UK of any size, while in France they are 31 per cent less for small businesses rising to 53 per cent for very large businesses. The Government’s industrial strategy should aim to ensure that energy prices for UK businesses and consumers remain comparatively low in relation to other OECD and G7 countries, while paying due attention to issues of energy safety, security of supply and environmental commitments.
Dr Richard Wilson OBE, TIGA CEO, said:
“The Government must take decisive steps to address long-standing weaknesses in the UK economy, including relatively low rates of investment and a comparatively poor productivity performance.
“The video games industry can contribute to this objective of securing the highest sustained growth in the G7. Our sector provides high skill employment in export-focused businesses in clusters across the UK. If the Government can help the games sector surmount barriers to growth by using the many levers we have outlined, then it’s a win-win for all stakeholders. We look forward to contributing further input as the industry strategy moves forward.”
[1] Games market trends to watch in 2024 (Newzoo, 2024). [2] Global Games Market Report (Newzoo, 2021). [3] https://www.ampereanalysis.com/products/about/games-markets [4] This echoes the UK business environment more generally. The UK is ranked third for start-ups but just 13th for the number of businesses that scale up successfully according to the OECD. See: Criscuolo, C., Gal, P.N., and Menon, C., The Dynamics of Employment Growth: New Evidence from 18 Countries (OECD, 2014). [5] Gibson, R., Gibson, N., Wilson, R., Start-up, Scale-up and Grow (TIGA, 2024). [6] https://ukgamesfund.com